May 30, 2020 Weekly Market Update. Market sentiment remains sanguine as the country continues to re-opening businesses and the development of coronavirus vaccine by Fall becomes a possibility. Investors continue to shrug-off news of frightful economic data with the impression that the worst is over, and we have hit the economic bottom. The Dow Jones led all the major U.S. indices +3.75% followed by the S&P 500 +3.01%and the Nasdaq +1.77%. We still recommend portfolios should have meaningful equity and cash positions, keeping both feet placed in potential returns and cautious safety of cash. The reality is there will be obvious sequential improvement in businesses, often with double digit increases, given sales for many industries were severely damaged: for April, retail sales were down -21.6%, auto sales down -53%, airlines sales down -90%, etc. Also, there remains other new risks, such as renewed trade tension with China and simply put, on the home front many business sectors can't operate at the same profit levels anymore until there is a vaccine. Yet, valuations are priced as though the economy was operating at 2019 levels with sizable growth ahead and no uncertainty (2nd wave?).

May 22, 2020 Weekly Market Update. The U.S. equity markets recovered last week’s loses on expectations of a possible COVID-19 vaccine, another phased reopening of the economy and additional stimulus programs underway: S&P 500 Index +3.20%, Dow Jones Industrial Average +3.29% and Nasdaq +3.44%. Recent economic data suggest a national unemployment rate of 14.7% with about 38 million Americans filing for unemployment over the past nine weeks. However, the very valid investing theme grabbed investment professionals’ attention on Monday of this week, and that was a salient excerpt from Fed Chair Powell’s interview: "There's no limit to what we [Fed] can do." Well, then, the market awaits the Fed fixing the following: Housing starts dropped -30.2% in April, existing home sales report dropped -17.8% in April, unsold product inventory of 4.1-month supply at recent sales pace, 38 million people out of work (of 165 million workforce, or 23% unemployed), overall decreases in manufacturing employment this month with 58% of firms reporting decreases in activity, amount of debt classified as distressed in the U.S. up +161% in just the last two months (to more than half a trillion dollars), etc. The point being is that even with unsurpassed stimulus and Fed liquidity support there still remains an enormous amount of "fixing" to be done by the government and its agencies (Treasury & Fed). That said, we reiterate that investors should have both equity and cash positions to hedge the ultimate outcome which could result in further volatility until the economy is able to both adapt and reinvigorate.

​May 16, 2020 Weekly Market Update. Stocks lost steam and ground on the week with S&P 500 losing -2.26% on Fed Chair Powell statements indicating the U.S. economy is facing unprecedented risks that "could do lasting damage." Powell said almost 40% of Americans in households making less than $40,000 a year had lost a job in March. Particularly salient remarks were the following: “The loss of thousands of small- and medium-sized businesses across the country would destroy the life’s work and family legacy of many business and community leaders and limit the strength of the recovery when it comes” and “While the economic response has been both timely and appropriately large, it may not be the final chapter, given that the path ahead is both highly uncertain and subject to significant downside risks.” The stock market is no longer tied to the economy as it is metamorphosizing into the market of the Fed & government stimulus. Typically, the decision of cash would be a no-brainer given the catastrophic economic damage of suspending most business activity for months, but the government seems adamant about backing the entire economy, and many segments of the capital markets, with its balance sheet (both government & Fed). There is a big investment theme for professionals and that is "don't fight the Fed" - so, much of the rebound is also tied to "unlimited liquidity" from Fed Chair Powell. Also, medical/healthcare advances and progress against COVID-19 are inevitable, and the market will celebrate any news on that front. The most recent recovery rally has been more about phased business reopening, but that comes with significant "2nd Wave" risks as well. So, what to do? Well, in our humble opinion, there are obviously way too many unknowns (including uptick in trade hostility with China) to have all your chips waged on this table. Taking this analogy further, I think it is prudent to take some chips off the table given we are now only -11.7% down YTD. Thus, for those 100% invested, it would prudent to probably pick a day of market strength and reduce some of your winner positions (those with less than double digit losses). Let's do some quick math: GDP economy is losing about $2 trillion a month and all this stimulus is not even matching that drain. Also, let's look at supply-demand: 45% of the supply of economy is small business (2/3 of net new jobs) and these guys are being decimated with probably 30-40% shuttering in next few months; then, demand, we have the consumer being 70% of the economy and they are shell-shocked, many permanently unemployed and will likely have a changed mindset with greater debt and less stable job outlook. Trump is doing everything to get reelected and therefore the only caveat is if the Fed starts buying the stock market with ETFs (it moved into high-yield ETFs this week), then all chips should be back in the game.

May 9, 2020 Weekly Market Update. For the week, S&P 500 gained +3.50%, Dow Jones Industrial Average rose 2.56% and the tech heavy Nasdaq jumped +6.00%, despite another 3.2 million jobs lost on the week. The April unemployment rate reached 14.7%, marking seven-weeks of declines totally 20.5 million jobs; this surpassed the previous post-World War II unemployment rate record of 10.8% (Great Depression was 24.9%). It is apparent that the stock market considers a large swath of these lost jobs as simply temporary in nature, such as furloughs. The markets continue to embrace two big themes in which it considers positive: 1) the economies have established a phased reopening and that many states have entered this first stage and 2) both the Fed and the U.S. government has the stock markets back in the form of unlimited liquidity and immeasurable future stimulus. Further adding to market strength is progress with COVID-19 testing, treatments, and fast-tracked future vaccines. In short, equity market valuation pricing is very much forward-looking and placing its bets for the best case “V” recovery scenario. We caution that plans involving so many unknowns are unpredictable and therefore encourage investors to have a reasonable cash cushion in portfolio as expectations seem overly sanguine. Indeed, we predict job losses to have more permanency and anticipate a large collapse in small businesses; we also do not foresee the consumer spending at the same rate as 2019.

May 2, 2020 Weekly Market Update. The U.S. equity markets lost ground for the week with the S&P 500 (-0.21%), the Dow Jones (-0.22%) and the Nasdaq (-0.34%). The S&P 500 remains down -12.4% year-to-date and is still -19.6% off its all-time high of 3,386, reached back in February. On the week the markets were moved by counter-weighing considerations of the prospects of the U.S. economy initiating a phased reopening versus another 3.8 million workers filing for unemployment (total of jobs lost due to the pandemic is now over 30 million).